Blood on the Coal The origins and future of New Zealand’s Accident Compensation scheme Blood on the Coal The origins and future of New Zealand’s Accident Compensation scheme Hazel Armstrong 2008 Oh, it’s easy money stacking carcasses in the half-dark. It’s easy money dodging timber that would burst you like a tick. yes, easy as pie as a piece of cake as falling off a log. Or being felled by one. extract from The Ballad of Fifty-One by Bill Sewell Hazel Armstrong is the principal of the Wellington firm Hazel Armstrong Law, which specialises in ACC law, employment law, occupational health and safety, occupational disease, vocational rehabilitation and retraining, and employment-related education. ISBN no. 978-0-473-13461-7 Publisher: Trade Union History Project, PO Box 27-425 Wellington, www.tuhp.org.nz First edition printed 2007 Revised and expanded edition printed May 2008 Acknowledgements The author would like to thank: Social Policy Evaluation and Research Linkages (SPEARS) funding programme for the Social Policy Research Award Rob Laurs for co-authoring the first edition Hazel Armstrong Law for additional funding to undertake the research Dr Grant Duncan, Senior Lecturer in Social and Public Policy Programmes, Massey University, Albany Campus, for academic supervision Sir Owen Woodhouse, Chair, Royal Commission of Inquiry into Compensation for Personal Injury in New Zealand (1969) for discussing the origins of the ACC scheme Mark Derby for editing the draft text Dave Kent for design and production DISCLAIMER The views expressed in this paper should not be taken to represent the views or policy of the Social Policy Evaluation and Research Committee (‘SPEaR’). Although all reasonable steps have been taken to ensure the accuracy of the information, no responsibility is accepted for the reliance by any person on any information contained in this paper, nor for any error in or omission from the paper. 4 IntroduCtIon When introduced in 1974, New Zealand’s state-run ACC scheme was the world’s first fully comprehensive, no-fault system for personal injury compensation. The scheme remains internationally unique today. No other country has found a more successful population-wide approach to addressing the multiple problems resulting from personal injury. S this booklet explains, three major events in our ahistory shaped our current ACC scheme. The first occurred in 1896 on the West Coast when an explosion in the Brunner coal mine killed 65 miners and left widows, children and elderly family members without adequate financial support. The second key event followed World War One, when injured soldiers returned to this country to find themselves unemployed, on meagre pensions and without adequate rehabilitation. Efforts to avoid repeating this social betrayal after World War Two were further developed by the chief architect of New Zealand’s accident compensation scheme, Sir Owen Woodhouse, whose 1972 report ushered in the era of a comprehensive, 24-hour, no-fault accident compensation scheme, administered by ACC.1 The guiding principles of the Woodhouse 1 ACC, as an organisation, first came into being in report still form the bedrock of the current accident 1974 with the passage compensation scheme. into law of the Accident Compensation Act 1972. However, these principles have been compromised by the ascendency of neo-liberal ideology and its influence on social policy in the late 1980s and 1990s. The Accident Rehabilitation and Insurance Act 1992, which came into force in the midst of the Bolger-led National government’s cutbacks to social welfare spending, exemplifies the shift 5 towards neo-liberalism. While most of the 1992 Act has since been repealed, the vestiges of several key provisions remain, notably work capacity testing that enables the insurer, ACC, to restrict its own liability but often results in adverse outcomes for claimants. Neo-liberal deregulation further impacted on ACC when, for a brief period from July 1999 to June 2000, New Zealanders were given a glimpse of a privatised accident compensation scheme for work injuries. The opposition National Party has signaled that if it becomes the government after the 2008 election, it intends to re-privatise the ACC scheme, thereby re-introducing private insurance companies into the accident insurance 2 “National’s policy marketplace.2 This booklet argues for the retention of ACC is to re-establish a competitive market as a state-monopoly accident insurance provider. to provide accident insurance.” (National In March 2008 the ACC scheme was independently Party Leader John Key, Address to NZ Large reviewed by PricewaterhouseCoopers. The review described Herds Association our ACC scheme as ‘the only system in the world that Conference, 21 March 2007 provides universal, 24-hour coverage for all accidental physical injuries. ACC was a groundbreaking world leader at its inception and remains today highly regarded by many 3 Pricewaterhouse- experts in the field of accident compensation.”3 The review Coopers, Executive summary, Accident concluded that “the current ACC scheme is consistent Compensation with the Woodhouse principles, adds considerable value Corporation in New Zealand, scheme review, to New Zealand society and economy, and performs very March 2008, p. i]. well in comparison to alternative schemes in operation 4 Ibid, p. xviii internationally.”4 The author of this booklet is a lawyer specialising in employment, accident compensation, and health and safety law. My professional experience has convinced me that a privatised accident compensation system, as proposed by National, would retard claimants’ rehabilitation and weaken injury prevention programmes. 6 I do not, however, claim that the current ACC scheme is ideal, since not all of Sir Owen Woodhouse’s original recommendations were fully and properly implemented. In particular, I argue that changes to the scheme are needed to deliver effective and meaningful rehabilitation to victims of accidents. Thirty-three years after New Zealanders gave up the right to sue employers for accident compensation in favour of a fairer, more effective and universal system by which the whole community takes responsibility for accident victims, our ACC scheme, still the envy of the world, is at an historic crossroads. The 2008 general election offers an opportunity to retain the valuable features of this groundbreaking and socially equitable scheme, and to further improve it along the lines intended by its original architect. This booklet is intended to help you, the voter, consider the issues affecting our ACC scheme at the next election. It traces the origins of the scheme from the grossly inequitable and cumbersome system which preceded it, when workers were obliged to sue their employers for compensation for workplace injuries, into a system based on principles of fairness for all and shared community responsibility. It outlines how, in my view as a compensation law practitioner, the proposed privatisation of personal injury insurance would be detrimental to claimants and to society in general. I argue that certain aspects of the current scheme, dealing with the full rehabilitation of accident victims, are not working as effectively and fairly as they should. Finally, I provide a list of questions to ask of your election candidates, to help make ACC an election issue and to guide you in voting for its future. Hazel Armstrong April 2008 7 8 WorkIng In the slough of despond: 1870s – 1900 For over 100 years New Zealand workers have received statutory protection in the form of a workers’ compensation scheme, although for most of that time the amount of compensation was often inadequate, and the process for claiming and receiving it was arduous and uncertain. N the nineteenth century, British immigrants brought Ito New Zealand their understanding of workers’ rights and labour laws from an Old World entering an industrial age. In Britain, the increasing use of steam power, negligible safety standards and abject working conditions in factories and fields had created extremely hazardous working environments, and there was growing recognition that some form of legal protection should be afforded to workers. Workplace deaths and injuries resulting from poor working conditions led to workers claiming compensation from their employers. As the pressure on negligent employers grew, judicial minds were exercised and the judiciary developed common law defences that made it increasingly difficult for injured workers to succeed in their claims.5 The British courts tested liability against the fault 5 ‘Common law’ refers to the body of law principle – fault had to be attributed to a party for a claim established through for damages to succeed. This principle was used to reduce court action, rather than by Parliament. the economic demands on industry as well as on the cost of production. 6 Alan Clayton. “Some An “unholy trinity” of employer defences dominated reflections on the Woodhouse and ACC the landscape of nineteenth-century British industrial legacy” (2003) 34 law, comprising the doctrine of common employment6, VUWLR p449-450 9 7 The case of Priestley v voluntary assumption of risk and contributory negligence.7 Fowler (1837) 3 M&W1 established the principle Each of these employer defences eroded workers’ rights by of ‘common employment’ diluting employer responsibility in the event of workplace which stated that an employee was deemed injury or death. In addition to these common law defences, to have accepted the risk the English Parliament introduced the statutory roadblock of injury as a result of any fellow employee’s action. of limitation periods, which prevented legal actions being The doctrine of voluntary brought after a specified time period. This system was assumption of risk (or volenti non fit injuria) transferred largely unchanged to the booming, free-for- prescribed that on all colony of New Zealand. Any worker injured at their taking employment a worker voluntarily workplace was not entitled to compensation as of right, accepted the hazards of the job.